California affiliates hurt by tax bill targeting Amazon.com

For several years now, the military museum in Old Sacramento has quietly earned a nice little income by acting as a sales rep for Amazon.com.

But this small nonprofit, along with thousands of other California organizations and businesses, has been caught in an epic standoff between Amazon and state officials.

The state enacted a law last week requiring Amazon and other Internet retailers to begin collecting sales tax from California purchasers. Amazon says the law is unconstitutional and it won't collect the tax.

While legal experts expect Amazon to sue the state, the online giant already is taking action of a different sort. Hoping to exempt itself from the law, Amazon has fired its 10,000 California affiliates, cutting off their commissions. Scores of other e-commerce companies affected by the law, including Overstock.com and a slew of smaller firms, have done the same.

Their decisions won't prevent Californians from buying from Amazon and other online retailers.

But they will affect organizations like the California State Military Museum, which earned about $2,000 a year as an Amazon affiliate.

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